Throwing Good Money After Good

| No responses | Posted by: Tricia Hackett | Theme: Work with Communities, Youth & Education

As the cuts continue to bite, and voluntary sector organisations are expected to do more with less, focus perhaps naturally turns to the costs of running these organisations. Last month Gina Miller prompted furore with her comments lambasting the ‘business-like structures’ involved in running charities.

Just this week the Guardian’s Voluntary Sector Network hosted a discussion on the appropriate level of overheads that voluntary and third sector organisations should be spending to support their core costs.

Agreed – wasteful and inefficient practices can result in spiralling administrative costs, and appropriate systems and reporting structures obviously need to be in place to demonstrate that an investment in overheads is a worthwhile one. For traditionally, having low overheads is seen as a quick indication of a third-sector organisation that is well-run and effective. However new research from Giving Evidence and Give Well disagrees with the idea that charities should spend less on administration arguing that “low admin costs do not signal that a charity is good. They signal the converse”.

Here at The Young Foundation we work with many voluntary and third sector organisations – often supporting them to grow and scale as sustainable ventures. Chance UK, one of 25 projects we are working with as part of the Realising Ambition programme of work, was recently highlighted in an article in the Guardian arguing that charities spending resources on administration is not a sign of inefficiency or worse. Rather it should be held to demonstrate that resources are being invested building core organisational health, making sure the right beneficiaries are being reached and the ability to demonstrate social impact.

Based in London, Chance UK recruits and trains mentors for primary schoolchildren who are at risk of developing anti-social behaviour and possibly being permanently excluded from school. According to the article “The charity spent some money evaluating its work and found that male mentors were best suited to children with behavioural difficulties, whereas children with emotional problems responded better to female mentors. The money spent on such an evaluation would normally count as admin, but for the children whose support has improved because of this insight, it was money well spent.”

At The Young Foundation we welcome coverage and discussion that moves the debate on from the narrow view that low overheads always equal healthy organisations. Our work and experience shows that, now more than ever, third sector organisations and social ventures need to feel able to invest in their own organisational health and capacity to be able to deliver with greater social impact and cost-effectiveness.

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